The vital role of strategic people management in these uncertain times

Blog posts

18 Apr 2019

Duncan Brown, Head of HR Consultancy 

Do you think the government and the Civil Service really have a strategic plan for Brexit?  You know, a huge Gantt chart with hundreds of nodes and ‘what if’ pathways that dozens of Civil Servants are poring over before they can follow the politicians and get away on their Easter holidays?

Some critics argue that our current ‘Brexit bedlam’  is caused by the fact that there isn’t one, for immigration or anything else; and the government are just surviving day-to-day, lurching from crisis to crisis. Others allege there is in fact a secret plan, to avoid leaving altogether.

It has looked to be a very similar, challenging situation for HR functions in recent years. Our research work in partnership with the CIPD has been looking, firstly, at the evolution of ideas of strategic human resource management (HRM) and workforce planning, in a detailed literature review published in February. Secondly, in our latest research report we profile the current situation, based on case studies in four employers and draw out some tentative conclusions for the future.

The History

As our review shows, ever since notions of  strategic HRM and business alignment first came over the Atlantic from Harvard 30 years ago, rapidly replacing the more pluralistic notions and job titles of traditional personnel management, there have been similar contradictory allegations, of HR ‘cock up’ and ‘conspiracy’.

On the one hand, many studies (for example, by IES board member Professor David Guest, 2013) have highlighted the implementation and line management issues commonly experienced with trying to enact HR policies; creating what my esteemed colleague Stephen Bevan once famously referred to as ‘the rhetoric : reality gap’. On the other hand, some academics and trade unionists were suspicious of strategic HRM from the outset. Tom Keenoy (1990) labelled it a ‘wolf in sheep’s clothing’, allegations given succour by the subsequent post-financial-crash-decade of real pay declines and pension cuts, zero hours contracts and ballooning executive remuneration, leading to ‘the potential demise of HRM’ (Dundon and Rafferty, 2018).

So is the management of people and the HR functions' work in organisations today really about growing the long-term value of an employers' most important asset, in an increasing uncertain and skills-short labour market? Or is it more to do with continuing to drive costs down and shareholder returns up; and meeting the bare minimum standards required by employment legislation?

Our look at the reality of people management (as it is increasingly called today, rather than HR management) in these four case study employers comes up with some generally positive findings. We conclude that a variety of techniques are being used to make a strategic approach to people management a successful reality in these organisations.

So what did we find?

The Current Reality

Firstly, our current uncertain, Brexit-battered context and the scale of the challenges this presents – particularly of sourcing and retaining labour with record numbers in employment, but also developing talent, managing the risks presented by new employment legislation, and of making change happen - actually seems to be increasing the influence of the HR function and its plans and policies, rather than their ‘demise’. People management has become increasingly integral to business strategies and their delivery for all employers, in low paying sectors such as retail and care homes, just as much as in knowledge-driven public service and higher education employers.

Jane Ashcroft, a former HR director and now Chief Executive of Anchor Hanover, for example, refuses to have a distinct people strategy, because she sees it as so integral to their business strategy. ‘Our customers live with us, so the workforce is above and beyond critical’ she told us; and the people plan therefore can’t be ‘a specialist agenda, worked on in a darkened room by HR’. She somehow manages to pay care staff above the national living wage in such a cash-starved sector and is rewarded with outstandingly high levels of care and low levels of staff turnover.

Secondly, all of our case studies had a medium to long-term workforce plan, covering the numbers and skills and competencies of future staffing. IES was founded 50 years ago, partly to address the lamentable lack of then manpower, now workforce, plans in UK industry. This research suggests that, with widespread labour shortages and impending loss of EU migrant workers, they are becoming more common and important components of the people management strategy.

But critically, the case study employers all use selected metrics to track and demonstrate the progress and impact of their people plans and priorities, built on investments in HR information and communications systems and platforms. We found comprehensive performance scorecards in the Ministry of Housing, Communities and Local Government (MHCLG) and the London School of Economics (LSE); monthly reporting and an annual people review at Anchor; business KPIs at Revolution Bars; and also values/culture measures in all four cases.

Following her success in bringing down ruinous levels of staff turnover, the workforce planning and talent development plans of Fiona Regan and her HR team at Revolution Bars now not only involve significant investment in the development of Area Managers (the critical link between strategy and implementation in that business) but also extend right the way down to individual bars and their staff.

Thirdly, diversity and inclusion and employee health and wellbeing have become critical components of the people management plan and, increasingly, the business strategy. More recent academic research studies (see Peccei, 2013, for example), but also their experiences – of increased absenteeism and stress levels at work, of being ‘named and shamed’ for their lack of diversity and gender pay gaps – mean that employers increasingly recognise their contribution to the performance of their organisation and of the national economy .They are being forced to recognise too the importance of a multi-stakeholder-driven agenda, and HR policies are seen to play a vital role in delivering on this and regarded as key to avoiding the dreaded ‘say : do’ gap in actually ‘practising what we preach’ on the organisation’s culture and values (again, reported on internally and externally in all cases).

Our report highlights that the key capabilities required by HR leaders and professionals in delivering on their people management ambitions need to extend well beyond business understanding and strategic planning skills. As Indi Seehra, the HR Director at LSE told us, the people strategy can’t just be a ‘grand plan’ but is an evolving process; and as Christine Hewitt then at MHCLG elaborated, ‘the real value is in the discussion and process developing it and then the programme of actions to deliver it’.

These capabilities need to include: clear prioritisation of goals and effective HR metrics to track their delivery; managing the interplay between short term operational activities and longer-term policy goals in a flexible way; an effective HR function operating model; a focus on line managers and developing their people management skills; and exceptional communications and political skills.

The Future Need

The ‘heart and the soul’ of people management, which IES Visiting Fellow Professor Mick Marchington questioned in a much cited article a decade ago, seems very much alive and well in our case study employers, with the organisations’ purpose, values and culture being an integral part of their business and HR strategies. This also explains their focus that we found on developing appropriate leaders and leadership behaviours.

But the successful HR leaders of the future need to be highly politically savvy, flexible and tactical in how they pursue and deliver on their long-term vision of building an engaged, high performance organisation. As one of our interviewees at the Ministry of Housing Communities and Local Government put it to us, both ‘stakeholder management and having a clear vision for the future, whilst being tactical about how to get there, have been vital in ensuring that our People Plan has continued to have impact’.

So maybe there is one for Brexit after all…